Janet Yellen Won’t Give Up on the Long-Term Unemployed

Jordan Weissmann is Slate’s senior business and economics correspondent.

Today, the Federal Reserve chair used her first public speech since becoming head of the central bank to lay out her argument for keeping interest rates low in order to boost the U.S. economy. Her overarching message was straightforward enough: The recovery stinks. It “still feels like a recession to many Americans,” she said, “and it also looks that way in some economic statistics.”

Here was the real key, though: Yellen argued that there’s still plenty of “slack” left in the labor market, meaning she thinks there are far more Americans sitting around ready and willing to work than there are jobs available. As I wrote not long ago, not everyone agrees. The dissenters say that of the millions of adults who’ve been unemployed for six months or more, the vast majority will probably never work again. Companies aren’t interested in hiring them. Many of these job hunters will give up on their search altogether. And while keeping interest rates low to heat up the economy probably won’t change their fortunes, it might push up wages for those who already have jobs and spark inflation.

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Yellen, as she made clear in her speech, believes otherwise:

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[T]he data suggest that the long-term unemployed look basically the same as other unemployed people in terms of their occupations, educational attainment, and other characteristics. And, although they find jobs with lower frequency than the short-term jobless do, the rate at which job seekers are finding jobs has only marginally improved for both groups. That is, we have not yet seen clear indications that the short-term unemployed are finding it increasingly easier to find work relative to the long-term unemployed. This fact gives me hope that a significant share of the long-term unemployed will ultimately benefit from a stronger labor market.

In an ideal world, Congress would take some sort of steps to help the long-term unemployed. With the deadlock in Washington, though, Janet Yellen is all they’ve got.